Builders reported higher rates of cancellation in March, compounding the decline in sales.
The latest Housing Industry Association (HIA) report, which surveyed the five largest states, showed a 7.2% decline in the sale of new homes in March, extending the streak of losses due to the impacts of rising mortgage rates.
With the latest decline, sales for the first quarter of 2023 were down 45.9% from the same period last year.
Victoria and South Australia recorded the biggest declines in the month, with new home sales declining 23.4% and 22.4%, respectively. Queensland also posted a decline at 2.2%.
On the other hand, Western Australia registered a 22.5% increase in new home sales while New South Wales hit a slight growth at 1.7%.
Compared to last year, however, New South Wales had the highest decline as new home sales in the first three months of 2023 decline 75.9%.
Queensland, Victoria, and South Australia also recorded significant declines year-on-year.
Only Western Australia was able to post a growth in new home sales compared to last year, albeit at a small margin of 1%.
HIA senior economist Tom Devitt said many builders are reporting many instances of cancellation, with the rate hitting 30.5% in March.
“This means for every three new building contracts that are signed, one sale from a previous month is cancelled — many builders have reported 'negative sales' over recent months,” he said.
“The last time the rate was near this high was the start of the pandemic.”
Mr Devitt said the impacts or the RBA cash rate will continue to slow the market, holding down new sales and causing further cancellations as finance becomes challenging for many buyers.
“The significant increase in the cost of land and construction across all jurisdictions over the past two years is compounding the impact of higher interest rates,” he said.
“The additional costs of compliance with the National Construction Code, that come into effect this year, will further increase the cost of new home construction and dampen demand further.”
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